Tale of the Tape

Good evening folks. The markets giveth, the markets taketh away.

Stocks fell today and it got a little loose in the last hour or so. The S&P 500 and the Nasdaq both gave up 2%. This was the first down day for the Naz in 7 sessions.

The Real Estate sector was the worst performer which may not be such a surprise given news from Twitter that it would allow employees to work from home forever, not just during the shelter in place orders.

Maybe the tide is turning for commercial real estate as more and more believe that the work from home thing will continue to gain momentum. More about this below.

The House Democrats released a $3T coronavirus relief bill, you might get another $1200.

Word out about 30 minutes after the close – hedge fund titan and former president of Duquesne Capital Stanley Druckenmiller, at the Economic Club of New York, commented:

The risk-reward for equity is maybe as bad as I’ve seen it in my career. The V-shaped recovery is a fantasy…

I’m not a scientist, I’m a common sense guy. I just don’t think you can take massive amounts of money and allocate capital to zombie companies. It just doesn’t make any sense to me.

Harsh…

Here’s the closing prices on the four major equity indices:

S&P 500	2,870	-2.05%
Nasdaq	9,002	-2.06%
Russell 2000	1,275	-3.46%
Dow Jones	23,764	-1.89%

Work From Home, Jack

In an email to Twitter employees, Jack Dorsey announced that they would be able to work from home forever. Jack writes:

We’ve been very thoughtful in how we’ve approached this from the time we were one of the first companies to move to a work-from-home model. We’ll continue to be, and we’ll continue to put the safety of our people and communities first.

Well done Jack Dorsey!

Here’s the thing… We have the technology to support many people working from home far more often than they have done up to now.

We’ve had the technology for a while but corporate culture stood in the way.

If more large companies follow suit, this has the potential to enhance quality of life, reduce congestion and transportation strains, improve the environment profoundly, open up employment opportunities geographically, reduce corporate expenses – the list of upsides goes on and on.

Not much good has come from the pandemic, the whole thing’s been awful, but if it spurs a more rapid adoption of remote work, that could be one significant silver lining.

Way to go Jack Dorsey and shout out Matt Mullenweg – a trailblazer in remote work.

Uber Eats Grubhub?

From day one, Uber was insanely ambitious.

It believed it would take over the world and behaved as such.

Today, we learned that Uber is pursuing a buyout of Grubhub.

The combination of Uber Eats and Grubhub would produce the largest food delivery service by revenue and it would shake up the emerging industry.

Value types and journalists have been quick to criticize Uber and all the money the company has lost. As of 12/31/19, $UBER had negative retained earnings to the tune of $16B.

That said, they used to say the same thing about Amazon. 😉

Grubhub traded up 29% on the word. The company put out an offer to acquiesce at 2.15 $UBER shares for each $GRUB share, valuing the company at $6.25B. Word is $UBER declined the offer. Such is the dance…

Fed Purchasing Bond ETFs

Today the Federal Reserve started its corporate bond purchase program. BlackRock will head the operation.

The buying will target bonds of companies that were once classified investment grade but now have been downgraded.

Corporate debt market issuance is up 69% YTD over the same time period last year. 😳

Here’s a gif of Barry Bonds because we miss sports.

Things Are Costing Less

The Consumer Price Index fell .8% in April, this was the biggest monthly drop since 2008.

For those interested in the macroeconomics, here’s the Wall Street Journal with more.

This FRED chart is ridic…

Novavax 🚀

Biotech stocks are notoriously insane. Novavax is no exception. Monday it was announced that $NVAX received $384M from the Coalition for Epidemic Preparedness and Innovation to further develop its coronavirus vaccine.

Novavax will use the cash to conduct a Phase 1 and Phase 2 study simultaneously in an attempt to expedite the process.

Here’s the official press release and 6-month chart.